Stephen Biggar

[music] >> Hello, I'm Greg Bonnell. Welcome to MoneyTalk Live, brought to you by TD Direct Investing.

Every day, I'll be joined by guests from across TD, many of whom you'll only see here.

We're going to take you through what's moving the markets and answer your questions about investing.

Coming up on today's show, I had of yet another US bank earnings season, we will discuss the outlook for the financials with Argus Research is Stephen Biggar.

MoneyTalk's Anthony Okolie will give us a preview of what to expect from tomorrow's US jobs report.

And in today's WebBroker education segment, Jason Hnatyk will shows how conditional orders work. Here's how you can get in touch with us. Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.

Before we get to all that and our guest of the day, let's get you an update on the markets.

We will start with TSX Composite Index. It hasn't been a rousing start to the second quarter but we are starting to turn things around. Today we have a triple digit gain of 110 points, up about half a percent on the TSX Composite Index.

Among notable movers is Dollarama, clearly investors like the sound of their announcements.

They are up a little more than 7%.

We are seeing a pause in the rally of gold prices and some commodity names being actually traded today. B2Gold at $3.70, pulling back about 2.5%. South of the border, it wasn't a strong start to the second quarter but it's only been one week and we are not finished the weekend, it's only Thursday.

We are getting some green on the screen.

39 points or three quarters of a percent in the green for the S&P 500.

The tech heavy NASDAQ, how is it tearing against the broader market? A little stronger, just shy of 1% to the upside.

Levi Strauss seems to be figuring out the direct to consumer online sales thing and showing up in the results and the stock price.

At $21.52, that stock is up more than 15%.

And that's your market update.

We are about a week away from the kickoff to another US bank earnings season so how's the sector faring?

Joining us now discusses Stephen Biggar, director of financial institutions research at Argus Research. Great to have you back. Let's talk about how the banking sector is doing.

>> Hi, good to be back.

Financials were only up 10% last year.

Those regional banks had a really tough year, down 26%. There was a host of problems. Last March, we had the Silicon Valley Bank failure.

We had deposit outflows. Some questions about regulation throughout the year and then of course we had summarized in delinquencies and a charge often that really put a damper on the group and this year it's a bit better. The SNP is up 10 through the first quarter, financials up 12, they are beating regional banks who are up seven so they are holding their own.

People are taking a fresh look at banks so far this year.

>> Is an interesting time compared to last year.

Let's start breaking down some of the lines of business. So far, it seems that pundits feel comfortable with the no recession scenario. What does loan growth look like in this environment?

>> That's very important for banks, obviously, this no recession scenario.

They don't farewell in downturns so downturns are cyclical plays.

It's been slow and anemic and that's kind of what the Fed is doing.

They have raised interest rates quite a bit here and that has slowed loan growth.

Loan demand has really trickled. We are hoping that by the end of this year, if we do get some pullback in interest rates, we will get a little bit better loan growth and some segments are doing a little bit better than others, housing is not doing very well, there's a lot of turnover, business is not good. There's still a fair amount of credit card lending which is not great for consumers because it's high interest rate loans but that has been a source of loan growth for banks.

>> They are seeing signs that things are picking up.

So much of everything depends on the Fed right now.

Banking can be a complicated business.

It's those net interest margins, the deposit you are taking, what you're paying out of what you are getting in terms of loans.

What is the state of net interest margins right now?

>> Margins have been improving over the course of the past year and most of that of course is the yield on interest rates, right, and banks are naturally interest rate sensitive or asset sensitive which means they are, basically their lending book re-prices fast.

We think that the margins here have probably peaked for the cycle. They tend to get some benefit with a year-over-year situation but we are at a peak at this point. Ironically, at this point in the cycle, tends to be, where loan demand starts to get hurt, where lower rates will start to be more beneficial for banks if it stimulates loan growth a little bit stronger here and banks can still take advantage of I would say relatively high interest rates because kind of in the year or two after the pandemic which was rock-bottom in those interest margins were getting killed so we are in a better place in net interest margins and we expect additional expansion from here.

>> Talked about the Fed and what he gets up to this year, it will be important. The market is anticipating cuts and the Fed are saying they will be in a position a cup of their preaching patients. It seems like they're putting us off expectations of an imminent cut. What could that all mean for the banks? I think in terms of you talked about delinquencies earlier.

If rates stay at this level for much longer, can the consumer ride it out?

>> That's the wildcard and I think banks have done better.

It makes it difficult to refinance. That's a problem for homeowners with adjustable-rate mortgages.

A lot of customers have fixed rates and have been hurt by higher rates. Also new purchases, taking a loan today the cost is very high. And those refinancing, sometimes you have business loans coming due and in the office property market in particular or commercial real estate. So that is put a damper. Where the real degradation and credit quality has been lately has been on the consumer side, particularly the credit card space, as I mentioned. Auto loans have improved but not quite as far. It really indicates to us that the lower income consumer, the folks that kind of use credit cards to get from paycheck to paycheck and the rising cost of living that inflation has produced or basic goods, things you cannot do without, food, housing, clothing and utilities, that sort of thing, it really put lower income consumers in a bind so we are watching this closely.

>> That will be important as the earnings season comes upon us, we are always looking at loan-loss provisions, delinquencies. What else are you going to be watching for the discerning season when it comes to the big banks?

>> Well, of course, the big swing factor for the large banks would be capital market segments.

There is a lot of crosscurrents in that space. I think that will be one of the largest widens, commentary about the office market particularly for the regional bank so a smaller proportion for the large level bank so that's really going to be a? For bank management and also deposit flows.

A year ago it was a big concern, clearly as the rest of 24 went on, it became less of a concern but it's still important.

It's a very important source of financing for banks.

We will be listening to what the deposit betas are, that's how much banks have had to increase deposits in order to retain or how much they have increased relative to the Fed funds rate or other interest rates so how they are going about retaining the solid deposit base that they need to fund their loans.

>> Alright, a lot of great ideas there for us to keep our eyes on as we get into yet another bank earnings season.

We are going to get your questions about financial stocks for Stephen Biggar in just a moment's time.

And a reminder that you can get in touch with us any time.

Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.

Right now, let's get you updated on the top stories in the world of business and take a look at how the markets are trading.

Dollarama in the spotlight today, boosting its dividend by 30% in the wake of growing the top and bottom lines in its most recent quarter.

Bargain hunting households drove an 11% rise in the number of transactions at the cash registers and Dollarama, resulting in a nearly 9% jump in comparable sales at Dollarama compared to the same period last year. The street seems to like it, they are up more than 7%. Also got some news out of Ford Motor Company today. It says they will delay electric vehicle production at its Oakville Ontario Plant until 2027. Ford's three row electric vehicles were scheduled to start production at the facility west of Toronto next year.

Ford says the delay will allow for consumer demand for three row EVs to further develop and for the automaker to reap the benefits of improving battery technology. Three row electric vehicles, I didn't know what that was, Ford hasn't said what they have planned for the Oakville plant but it seems to be a crossbreed of a minivan and an SUV with three rows.

Levi Strauss is starting to see the benefits of its direct-to-consumer strategy. The denim apparel maker has been shifting focus to online and it standalone Levi's outlets, a departure from selling its genes through big department stores.

That's what they did when I was a teenager. Levi Strauss is now saying half of its business is going through direct channels which bolsters the bottom line.

The market like the sound of all of that.

$21.53 per share, it is up 16% on the session.

Let's check in on the markets, starting with the TSX Composite Index. It's up about half a percent even though we are seeing a pause in the rally in crude and old prices. South of the border, the S&P 500, the broader read of the American market is up three quarters of a percent.

We are back with Stephen Biggar, take your questions about financial stocks. Let's get to them. First one here for you. What is the outlook for capital markets at the banks?

>> Yeah, so capital markets are crosscurrents right now. I would divide this into three or four main categories.

You got investment banking, which is mostly IPO activity, equities coming to market, new public companies, you got bond issuance, so corporate or municipal bonds issuance call me about trading operations and you've got advisory, M&A activity and so forth.

In no particular order, I guess, the M&A environment has been in the doldrums for… A couple of reasons for that, a trend of drivers of M&A activities had to be CEO confidence and availability of financing, geopolitical concerns or people stepping back from considering large acquisitions so there has been the CEOs of some of the companies and the banks as well have been talking about more constructive dialogue that they are having with prospects for M&A and so the irony is that equities obviously are at all-time highs which is great currency to do deals. Financing from a fixed income perspective obviously is very high at this point so there is an imbalance there.

But the fact that as you mentioned the recession seems to be staved off for the time period, it looks like we are going to get a soft landing which is beneficial. We do expect a rebound in M&A activity.

Trading operations have been very strong for the last couple of years and we see them easing. In the first quarter, not that great on trading banks. The reason is they make money when there is a lot of volatility up and down and in the first quarter, we had this low grind higher in the market so not a lot of downside, not a lot of sharp rises or falls.

With equity in IPOs, there have been a couple of false starts.

We had a few big IPOs in the fall. That has trailed off again. We had another few earlier this year.

There is not a lot of compelling reasons especially when you have kind of uncertain activities following an IPO, the price does not get boosted a lot, it interferes with companies intending to go public.

We always seem to be a quote or two away from really having that benefit, the top revenue lines for banks.

>> Great break down there on the capital markets and what's happening. Another audience question. Someone wants to know what impact the rate cuts might have on the banks.

>> Yes, it's ironic that banks are usually rooting for higher rates because they are acid sensitive but in this case, rates have I think been deemed a little bit too high in the cycle and they are starting to impede loan growth, they are starting to make it more difficult to get financing, difficult to refinance and that causes some delinquencies as well.

So I think we are less worried about interest margins here as rates come down and more concerned about just having a little bit better loan demand across the broad spectrum of the categories and keeping those delinquencies down because banks really have provided all lot of loan-loss provisions in the last year in anticipation of that weaker economy. So if we don't get that the longer we go, some of that could blow back and be a booster earnings for banks.

>> An intriguing notion and that creeps onto the show every once in a while, it's not the house you here either, we talked to TD Economics, TD Securities, TD Asset Management, but what if there wasn't any rate cuts from the Fed this year? Jay Powell says, the economy is performing too strongly. What would that mean for the banks?

>> It would have to come with the fact that the economy is, as you mentioned, stronger, which means that loan growth would probably hold up, so the question is less about loan growth and more about delinquencies, so the longer you go with these higher rates, the more opportunities there are for default or the inability to refinance and clearly that's also on the office property side.

So I would be somewhat concerned that it brings back that possibility of a harder landing for banks and but there is some consolation prize. Loan growth will probably not show off any further than it is so we will have positive momentum on the loan growth side.

>> Let's get to another audience question.

We mentioned the regionals earlier. What is the health of the regionals amid concerns around New York Community Bancorp?

>> NYCB certainly, the regional bank apparatus, we don't cover NYCB directly but clearly we have to keep an eye on what is going on in the space and it strikes me that they grew a little bit too fast with acquisition which seemed, buying assets on the cheap seem like the right thing to do but they are a little too concentrated in the New York market and the commercial property space in particular and I think that's kind of… All of these banks that had trouble or even that failed last year like Silicon Valley had sort of unique problems with themselves, whether it was the business model, poor interest rate risk management, Silicon Valley had this extensive customer base that was very concentrated in unprofitable startups, all of which were pulling in their or winding down their deposits to fund their operations, they were not able to go public, there was not a good market for it, so there's just such a concentration there. At the same time, when the banks pull all this money in from previous funding rounds, they invested it in longer-term securities, trying to stretch some yield out of it and they got caught very flat-footed when customers came asking for deposits. So we don't see any other banks in that capacity or having that distinct business model so NYCB had their own sort of things and we have not, however, seen any kind of deposit flight from them. They recently got a very strong funding round of investment capital infusion and it looks like they are now on better footing. The equities not performing well but so again something to monitor, something that does not appear to have any contagion at the moment. We will be watching fairly closely.

>> All right. Very interesting stuff. As always at home, make sure you do your own research before you make any investment decisions.

We will get back your questions for Stephen Biggar on financial stocks and just moments time.

And a reminder that you can get in touch with us any time. Just email moneytalklive@td.com.

Now, let's get our educational segment of the day.

There are different order types available on web broker and in today's education segment, Jason Hnatyk, Senior client education instructor with TD Direct Investing will be walking us through how conditional orders work.

>> It's great to be here as always. Always excited to talk about orders on web broker and we are going to talk about conditional orders here, more specifically the one triggers another or OTA. They can be useful. Two things jump out to show how versatile they can be for investors.

One is they allow you to automate the process a little bit. You don't need to be at your computer. The market is always going to continue to move but you can set up a sequence of events to take place so you are always at the wheel even if you're not at your computer and second of all, they can really help an investor implement their trading plan, whether that's to capture gains or limit losses and by doing that, what I found is that can help investors take emotion out of the trade so as to make clearer decisions. The Samantha White broker and take a look at how we can implement OTA orders into our trading process.

I'm on the trading strategies page.

We are going to be focusing on the one triggers another which is on the left-hand side. This little diagram and description available on this page really do a great job telling us all about this really useful order type.

The order in itself, it's effectively to orders. You have a first order and only one that first order executes will trigger a secondary order to become active in the market.

New common use cases for OTA's or one would be to enter an order to a long by position and then your secondary order could be something you would use to maybe take profits or to limit losses so you are inputting that trading plan, or secondarily, some people can use OTA orders to rebalance their portfolios, so your first order could be selling out of a particular position that you own and your secondary order might be shifting and moving over and buying into another long position.

We will do an example in just a second but I also want to highlight at the bottom of the screen that we put in a link to one of our videos all about conditional orders so you will be able to fact check and go back and see all of the nice need to know bits of information about the other conditional orders as well.

I've got a chart appear on the screen for everybody.

This green line that I want to highlight, that would be order one for us. That would be our proposed limit order to buy a particular security.

If and when this order fills, a secondary order would then be put into place. I was going to highlight above this line to visualize this. Maybe you will say this is at 520 for arguments sake. If we can imagine the secondary line on this chart up around 530, that could be our second order to take our profit if we are right and have guessed that this particular investment is going to go up, we can be prepared To those profits even if we are not at our desk.

Let's place this order and I can show you how easily that can be executed as well.

We are going to go up to the top of the screen, click on the buy sell button, once I go ahead and select that, I need to go to the strategies tab at the top of the screen.

We are back to choosing one triggers another. We've got to order entry tickets that we need to fill it all in the same process. Nothing different from you or normal entry, we are just entering both trades.

We are when you choose the symbol we had earlier on our chart to keep things consistent. We will keep our order as a long by order and keep that price just as we had in our example, at $520.

If the stock comes down to our price, we will be in place to buy it where we may see value.

I'm going to change our good till, I'm going to make that good till cancelled.

The reason I want to do that I will clean after we enter our second order.

We are going to click on the bottom portion of our screen and this will bring up the secondary order. You can see where it says OTA. Our first order is our primary, this is our secondary order that will take place if and when the first order fills. Let's keep it simple, the same, flip our action over to sell, quantity from the first order is going to remain the same and in this case we are going to heed the price type the same at limit. You got other choices available.

This will be our profit taking order. Back to the good till section, when you are using any conditional order, the good till time portion selection seem to be identical for both legs of the order so that we know we are in good standing there. Canadian orders, we choose good till cancelled, they are good for 90 days, US orders are good for 180 days. It's as simple as that. That's our OTA order which allows us to be flexible and implement our trading plan and be prepared for whatever the market throws at us.

>> Our thanks to Jason Hnatyk, Senior client education instructor with TD Direct Investing.

And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.

All right, we are back with Stephen Biggar, take your questions about financial stocks.

All right, we have Mr. Biggar, I'm interested in US investment banks, what is your take on Goldman Sachs?

>> Goldman is very capital market sensitive.

The do you have a growing wealth management business but they are among, within our coverage, the most sensitive to those capital markets operations.

When you are in that space, you have to live with the large swings that you get in revenues from that and wherever the market environment is at any time. That's why we are a little bit more cautious on Goldman relative to say Morgan Stanley which has a much larger wealth management, it has about 50% of revenues and most of the rest being capital markets but some of the other things in terms of E*TRADE, retail trading operations that Goldman does not have.

Goldman made a number of strategic missteps if you will during the consumer buildup. They are trying to build up their consumer business and they still have the Apple space in terms of their credit card there but they have largely given up on a lot of that. They have sold off a fair amount or close down their consumer banking business. They had hoped to have a big source of inexpensive deposits but it's just not their competency and they are moving away from that. So we are back to the environment to capital markets.

You want a strong environment for initial public offerings or debt issuance which was decent in the first quarter but equity issuance was not about financial advisory, M&A activity, particularly a strong trade environment, because they are very reliant on that. So not a bank that we see at risk at all. It is still plenty profitable.

For our sake, you knew a little more confidence in the up cycle with respect to all things capital markets to be more favourable.

>> Interesting break down there on Goldman Sachs. Another question now from the audience.

A viewer wants to know how you are viewing the risks from office real estate.

>> Yes, so office is very much a thorn in the sides of banks right now.

Probably the one thing that stands out to me is, among the riskier aspects of banks and less so for the large global banks because their exposure is just not as high but for the regionals and in particular community banks are more at risk there so a couple things about the commercial real estate exposure. For banks, it can be 15 to 20% of loans, the office space is roughly about half of that. The good part, if you think about it this way, office real estate and commercial generally, this is not like when you buy a home and you put 10 or 20% down and borrow the rest.

The borrowers here have to put down more like 30 or 40%, often even 50%, so that leaves a lot of gap of how much the office value the property values have to decline before a bank is at risk that they can still unload the property if the borrower defaults and they are in a situation to have to dispose of it had a pretty steep discount. So that is beneficial.

Also, the loans are generally shorter-term, 3 to 5 to 7 years, so that's why the longer rates stay high. It's more of a slow-moving train wreck rather than a high-speed train wreck and that gives some time for those things to play themselves out say don't get this massive wave of defaults in any given point.

So I don't see it as an enormous risk within each and every quarter but it's a building, developing risk over the next several quarters. The pure amount of refinancings that are going to be coming to you in the next few years.

The problem with office right now of course and that space and particularly within commercial real estate is that vacancy levels are quite a bit higher.

You've had these work from home initiatives since the pandemic, a lot of companies are reducing or eliminating their space as we work from home, maybe didn't come into the office as often, they have a hotel operating environment, you come in for a couple of days for work at home for the rest her come in for meetings so that has resulted in quite a bit less space that's needed and therefore higher vacancy rates in the space.

So it's a great question and it's something that clearly analysts want to focus on as the quarters go by here.

>> Is an interesting space to watch.

Many interesting changes we've seen in recent years when it comes to workplace culture. Another question. This one about politics.

Can the US elections have any implications for the banks?

>> Well, it could.

There is some distinction between a Republican administration and a Democratic administration and what we have seen under the current administration is greater regulation, greater desire to have more capital, more fines, trying to lower costs for consumers in terms of late fees or interchange fees received by credit card companies and things like that, so those tend to be universally kind of for revenues for banks and the other would be M&A activity.

We are seeing a lot more department of justice or Federal Trade Commission type of opposition to some merger activity that's taking place or that the industry would like to do, such as the JetBlue and spirit merger that was declined. We have discover and Capital One trying to merge and I'm sure that's going to get a lot of regulatory scrutiny.

In some cases it eliminates the possibility of mergers and that clearly has a lot of money at risk for financial advisory firms that have the stakes together.

There was a. Shortly after the Trump election of 2021 financials did extremely well and the thought process was that regulations would be eased a bit and in particular, your Goldman Sachs and Morgan Stanley did very well because it was assumed that banks would have an easier time in that environment with capital regulation opposition to M&A and so forth.

It's too soon to tell. The bank industry is one that is resilient. It is built to be all weather, can do well under either administration and we think they will continue to do well in some areas probably, better than others under certain administrations but banks have to take the hand that they are dealt and make the best of it.

>> We will get back to your questions for Stephen Biggar on financial stocks in just a moment's time. As always, make sure you do your own research before making any investment decisions.

and a reminder that you get in touch with us at any time.

Do you have a question about investing or what's driving the markets?

Our guests are eager to hear what's on your mind, so send us your questions.

There are two ways you can get in touch with us.

You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.

We'll see if one of our guests can get you the answer right here at MoneyTalk Live.

Tomorrow, we are getting a jobs Friday, that US labour report will be a big focus for investors trying to get some insights about the state of the US labour market, the economy and what it all means for interest rates. Anthony Okolie now joins us with a TD Securities forecast for payroll data and their outlook for interest rate.

>> The next Fed meeting won't be until May 1 but certainly investors will be focused on this next report and TD Securities looks for job growth in the US to have lost momentum in March as the labour market moderates towards more sustainable levels.

They expect a below consensus print of 180,000 jobs for March, that's after we saw job creation topping expectations in February and we saw this deep revision in the January figures. TD Securities expects unemployment rate to remain steady at 3.9%, that is slightly below consensus.

Meanwhile, they are expecting points three month over month increase. There are plenty of other US releases this week that reinforce the idea that the US labour market is cooling but remains on solid ground.

We will start with private payrolls in the United States. On Wednesday, we got the private payrolls number was which grew by 184000 Workers in March which is above expectations from Wall Street.

Private-sector job growth expanded in March at its fastest pace since July 2023, indicating continued strength in the US labour market according to the payrolls processing from EDP. ADP also noted that wages for workers who stayed in their jobs actually rose just over 5% from a year ago and that is the same as it was in February.

Those who switched jobs saw gains of 10%, that's higher versus previous months.

We also got an early look at US jobs data through the JOLTS Survey as well which edged up slightly in February as hiring also increased, reflecting further signs of resilience in the US labour market.

But of course, this morning, we got the latest US jobless claims with initial claims rising leading to a two-month high.

Some attribute this to an early Easter this year.

That makes it difficult to infer anything from the one week's rise in claims.

While layoffs rose to highs, job cuts were little changed versus the same period last year.

In addition to the US jobs data, we also get a fresh read on the health of the Canadian job market as well this Friday.

The Canadian Jobs Report will be coming out.

Consensus is for unemployment to slip lower to 3.8% versus the 3.9% in February with the economy adding just over 34,000 jobs, that is slightly below the more than 40,000 jobs that we added in March and will have close coverage of that report as well as the Bank of Canada's next week.

>> We will probably be discussing the same time tomorrow those two reports and what it all means. When it comes to the US side of the equation, what is happening?

>> The fed kept the rates on hold in March. The chair Jerome Powell made remarks on Wednesday when he said there needed to be more evidence before rate cuts begin.

With that in mind, TD Securities expects the Fed to start cutting at the June meeting as they look for PC inflation to resume its path towards normalization over the next few months. You can see in the chart that they have continued to pencil in a larger magnitude of policy and easing them Fed officials and the market which currently anticipate 100 basis points of cuts this year.

>> Interesting stuff. Thanks for that.

>> My pleasure.

>> MoneyTalk's Anthony Okolie.

Now, for an update on the markets.

We are having a look at TD's Advanced Dashboard, a platform designed for active traders available through TD Direct Investing.

We're looking at the heat map, the market movers on the TSX 60, screening by Price and volume.

We are seeing a pause in the rally in crude oil and gold. You have some of the mining games pulling back modestly. The energy names are holding it and some of the financials are getting a bit of a rally but the big Green on the screen is Dollarama, had a good quarter. South of the border, let's look at the S&P 100, he was giving us the topline green on the S&P 500.

Tesla coming up 5%. A mixed picture in the tax base. Some of the big tech heavyweights modestly higher except for AMD, they are pulling back about 2%.

You get more information on TD Advanced Dashboard by visiting TD.com/advanceddashboard.

We are back now with Stephen Biggar from Argus Research. Someone wants to get your outlook for the credit card companies.

>> The big news in the credit card space obviously is the merger of the what are the second and third largest companies by market In the consumer finance industry within the S&P 500 which is Capital One buying discover. So these companies have done well in terms of revenue. A lot of credit card spending, a lot of loans being taken out on credit cards. Some of the interest margins have moved up as well as rates have moved up. They are not quite as sensitive to interest rates as banks are but the delinquencies have been rising pretty substantially so that is because they lot of loss provisioning. Most of it as a safety manager. They are doing loss provisions well in anticipation of greater delinquencies going forward so it is a source of potential profits down the road to come back on on the income statement.

I think these companies are in a pretty good spot with consumers generally. I think there this time getting ahead of the potential delinquency downturn and have that good revenue flow and it's not just credit cards. Most of those companies are involved in home-equity lending and auto loans and specialty of financing, things like that.

That does give them some diversification in terms of loan categories and so forth so we are favourable on the industry generally here. These are companies that do trade at pretty low PEs relative to the market, single digit to 10. I think it is because of that variability in the revenue stream and how concentrated they are towards the consumer and what happens to delinquencies in a downturn but still I think there are some good opportunities in the consumer finance space and credit card names as well as kind of the related companies, payment processors like MasterCard and Visa, which provide the backbones for global payments and fidelity information national is another name in that space.

>> Interesting stuff to watch there. We have run out of time for questions.

Remind us what you are going to be looking for heading into the season.

>> It's a combination of commentary on the future. I think that's always the driver here, how bank management is taking the economy and where we are on the cycle, how they have pivoted on interest rates last quarter. Some were expecting four or five rate increases in 2024. It doesn't look like beer when you get that.

We are now thinking a pullback to three at best in the second half. That is going impact what they say about margins and loan growth and anything about the office market, real estate generally.

And pondering those delinquency trends also and see if we have not just gotten back up to pre-pandemic levels where the opposite kind of occurred since the pandemic. Normally you would expect high employment to result in very strong rise in charge offset which didn't happen.

There is so much to Mila's money that came in, consumer protection programs and checks and so forth. Workers came back quickly to their job so that wasn't a big problem.

So how they view that environment going forward for that. And then of course the pipeline in terms of capital markets, has the pipeline improved at all in terms of initial public offerings or corporate debt issuance trending for the balance of the year next quarter. A lot of moving pieces there that we will be keeping an eye on.

>> You gave us a great primer today. I look forward to the next conversation.

>> Thank you.

>> Our thanks to Stephen Biggar, director of financial institutions research at Argus Research.

As always, make sure you do your own research before making any investment decisions.

be sure to tune in for tomorrow. We will be back with an analysis of the Canadian Jobs Report, the US jobs report. Anthony will be here with us breaking it all down.

On Monday show, Brad Simpson, chief strategist with TD Wealth will be our guest taking your questions about market strategy.

You can get those questions in ahead of time, just email moneytalklive@td.com.

That's all the time we have for the show today. Thanks for watching. We will see you tomorrow.

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